Intel Corporation

INTC Details

Intel Corporation (NASDAQ: INTC) is a world leader in designing and manufacturing microprocessors for personal computers and data centres. The Data Centre Group (DCG), Internet of Things Group (IOTG), Mobileye, Non-Volatile Memory Solution Group (NSG), Programmable Solutions Group (PSG), Client Computer Group (CCG), and other related divisions are among the company's revenue streams. Platform products include central processor units and chipsets, system-on-a-chip and multichip packages, accelerators, boards, and systems, connecting devices, memory and storage products, and platform goods such as central processing units and chipsets.

Latest News:

• Quarterly Dividend: On April 14, 2022, the company declared a quarterly dividend of USD 0.365 per common share, payable on June 01, 2022, to shareholders of record on May 07, 2022.

FY21 Results:

• Flat Revenues: The company reported revenues of USD 79.02 billion in FY21, reporting a 49% increase from USD 77.87 billion in FY20 (ended December 26, 2020), exceeding October guidance by USD 1.2 billion.
• Slight Drop in Bottomline: Net income was USD 19.87 billion in FY21, compared to USD 20.90 billion in FY20.
• Quarterly Dividends: On January 26, 2022, the company declared a quarterly dividend of USD 0.365 per common share (a 5% increase in quarterly cash dividends), paid on March 01, 2022, to shareholders of record on February 07, 2022.
• Cash and Debt Position: The company had USD 28.41 billion in cash and cash equivalents (including short-term investments) as of December 31, 2021, and total debt of USD 38.10 million.

Key Risk:

• Customer Concentration Risk: INTC's three largest customers accounted for 43% of revenue in FY21 (39% in FY20 and 41% in FY19), with Dell Inc. accounting for 21% (17% in FY20 and 17% in FY19), Lenovo Group Limited for 12% (12% in FY20 and 13% in FY19), and HP Inc. accounting for 10%. (10% in FY20 and 11% in FY19). As a result, if a company relies too heavily on a few clients, its long-term financial health may suffer.
• Global Operational Risk: Sales outside the United States accounted for 82% of revenue for the fiscal year ended December 25, 2021, with revenue from billings to China accounting for 27%. As a result, many global and regional factors beyond its control may jeopardize the company's operational and financial health.

Outlook:

Q1FY22 Outlook (Source: Earnings Release, Q4FY21, January 26, 2022)

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

INTC’s stock price has fallen 25.43% in the past twelve months and is currently leaning towards the lower end of its 52-week range of USD 43.63 to USD 63.91. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 52.60.

Considering the significant correction in the stock price, reduction in debt, solid margins and ROE, recent capital investment, positive outlook, associated risks, and current valuation. We recommend a "Hold" rating on the stock at the closing price of USD 47.50, down 1.27% as of March 21, 2022.

Three-Year Technical Price Chart (March 21, 2022). Source: REFINITIV, Analysis by Kalkine Group

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: All forecasted figures and industry information have been taken from REFINITIV.  

Note 3: The report publishing date is as per the Pacific Time Zone.